Hitman-TapouT lawsuit heating up
March 19, 2012
A lawsuit involving the former owner of Hitman Fight Gear and TapouT/Authentic Brands Group is heating up. MMA Payout has obtained the lawsuit which was filed in Orange County Superior Court in California.
Earlier this month, the lawsuit, filed in 2011, was leaked to the MMA blogosphere. The lawsuit, filed by Daniel Diaz, is a salacious look at the purported inner dealings behind the TapouT brand and its eventual purchase by Authentic Brands Group (ABG)
The Lawsuit
According to the lawsuit, filed on March 29, 2011, Daniel Diaz, founder of MMA clothing brand Hitman Fight Gear is suing TapouT, ABG and other related entities as a result of claimed promises and a business deal which did not go Diaz’s way. Diaz is also suing as a member of Fight Industries, LLC (F1) (known as a derivative lawsuit where a shareholder can bring suit on behalf of the company).
Diaz’s lawsuit alleges 12 causes of action (including 4 on behalf of F1) which includes: Breach of Fiduciary Duty, Conversion, Aiding and Abetting Breaches of Fiduciary Duty for Fiduciary Gain, Fraudulent Conveyance, Breach of Employment Contract – Wrongful Termination, Unpaid Wages, Unfair Business Practices for Personal Gain and Fraud in the Inducement.
The Alleged Facts
According to the lawsuit, Diaz and his brother established “Hitman Fight Gear” in 2001. In addition, Diaz did freelance design for other brands including TapouT. In 2005, Diaz entered into a contract with Russell Lin on behalf of a brand named Roxwell. Diaz would receive a 10% commission “on anything Roxwell made for TapouT” according to the lawsuit. Diaz’s lawsuit alleges that his designs under Roxwell for TapouT were a success and his income was “steadily increasing.”
The lawsuit indicates that Marc Kreiner’s role with TapouT affected Diaz’s commissions under the Roxwell contract. According to Diaz, Kreiner attempted to undercut the Roxwell contract by attempting to lower, by 10% the cost of goods on the TapouT-Roxwell contract.
According to the complaint in 2007, Punkass and Kreiner met with Diaz regarding “Hitman Fight Gear” in an attempt to purchase the company. A limited liability corporation, F1, would be set up to purchase Hitman on behalf of TapouT. Diaz agreed to a sale of his company in exchange for 1,125,000 Class B shares of F1 and an employment contract with the company. In addition, Diaz would give up his contract with Roxwell. Diaz claims that he was led to believe that the Hitman brand would be given the backing to become as big as the TapouT brand.
However, Diaz claims that the F1 company was used for the personal benefit of Kreiner. One of the allegations claimed in the lawsuit was that Kreiner was “accepting (indeed, demanding) bribes from vendors of both TapouT and F1.” (page 9 of the lawsuit) The lawsuit alleges a “kickback” scheme which vendors would receive as high as “one dollar per t-shirt which – over the life of the contract – might pay the vendor hundreds of thousands of dollars as a “kickback” to the vendor for providing Kreiner with demanded gifts.” (page 9-10 of the lawsuit).
In addition to this claimed scheme, Diaz alleges the misappropriation of TapouT and F1 funds for Kreiner’s personal use.
Diaz claims that he was not reimbursed for business expenses, which were included in his employment contract, due to the fact that F1 purportedly lacked the money to pay him.
TapouT-ABG transaction
The lawsuit claims that after TapouT and F1 were depleted, the companies were purchased by ABG for the following:
1) the payment of some of the debt Kreiner and Caldwell managed to accumulate through their alleged scheme of skimming cash and other assets out of the company;
2) future cash payments to Kreiner and Caldwell, only, the amounts of which, were to be withheld from Kreiner and Caldwell pending the resolution of remaining creditor claims against those assets
The purported transaction would leave the companies with little or no assets to pay its creditors.
Diaz claims that ABG discovered the conduct claimed by Diaz when ABG conducted its “due diligence” prior to purchasing TapouT and F1. Diaz claims that ABG used this information against TapouT and F1 (and to Diaz’s detriment due to his interest in F1) as leverage in negotiations by driving down the purchase price. In addition, Diaz states that ABG attempted to buy his “silence” through an employment contract with the new ABG TapouT entity. When Diaz refused, he believed that ABG went around Diaz. This led to, as Diaz alleges in the lawsuit, the diminution in value of F1 rendering his shares in the company worthless.
The Underground post
Earlier this month TapouT and ABG went into court seeking the return of stolen documents and disqualifying Diaz’s attorneys. The reason for this was due to an internet posting on MMA.tv (also known to most as The Underground) in which an article was posted which detailed the lawsuit. A link to the article has been taken down. This was about the same time that details of the original lawsuit hit the twittershpere. The internet post was discovered by an attorney for TapouT/ABG and a request to cease and desist was made to Diaz’s attorneys.
Prior to the posting, the parties agreed to a protective order during the discovery process which essentially means that the documents produced to each side would remain confidential. Among the documents produced included information related to the purchase of TapouT. Lawyers for TapouT claim that Diaz published information that were deemed confidential. In addition, TapouT lawyers state that the comments section after the article included information provided by Diaz which only would have been known by those privy to the documents under the protective order.
Some of the information has been released by others via twitter and/or other web sites. Essentially, the inflammatory information Diaz provides relates to the claimed indebtedness of TapouT prior to its sale to ABG. Also, some of the comments include information already identified in the Complaint related to the claims of a “kickback” scheme.
Despite the post and comments section, the court decided against immediate punishment for Diaz. The Minute Order provided by the court stated the order sought by TapouT was denied. The order did not include an explanation.
Payout Perspective:
The lawsuit appears to be heating up and there is a trial date set for this September. The lawsuit is obviously personal for Diaz and the posting on The Underground reflects this. The allegations against TapouT and ABG are serious and there may be more coming out of this lawsuit which may reveal a lot about one of the biggest brands in MMA.
Counsel counters Nevada’s claim Diaz lied
March 15, 2012
MMA Junkie reports on the ongoing saga regarding Nick Diaz’s response to Nevada’s allegations of marijuana use. Last week, Diaz’s lawyer argued in a response brief that Diaz should be cleared of wrongdoing.
Diaz tested positive for marijuana metabolites after his February 4th fight against Carlos Condit.
In a response brief addressing the Nevada State Athletic Commission’s disciplinary action, Diaz’s attorney, Ross Goodman, argued that Diaz did not break the rules as he tested for an inactive metabolite of marijuana not banned by the NSAC or WADA (World Anti-Doping Agency).
Diaz’s attorney argues that Diaz’s marijuana use is not considered a prescription drug. Also, he claims that Diaz did not need it to fight as the usage ceased, as is customary before Diaz’s fights, 8 days prior to the fight. Another of Goodman’s arguments suggest that the post-fight urine test may have shown higher levels of substances due to the physiological issues occurring at the time. In Diaz’s Declaration which was attached to the response, Diaz states that he had to lose 10 pounds the day before the weigh-ins (instead of his customary 2 pounds) and the 5 round fight with Condit incurred much more physical exertion than his normal 3 round fights.
As pointed out by Fight Opinion, Diaz’s attorney’s response brief is similar in argument to that of a guest editorial penned by Vancouver Athletic Commission’s Jonathan Tweedale on Bloody Elbow.
A public information officer for the Nevada Attorney General stated that Diaz lied to the NSAC in his pre-fight questionnaire when he swore he had not used prescribed medications two weeks prior to the Condit fight.
A copy of the questionnaire is here via Yahoo!
Diaz’s attorney argues that the questionnaire is inadmissible as evidence since Diaz did not sign the questionnaire “under penalty of perjury.”
Via MMA Junkie:
“In order for you to have a false official statement, it has to be sworn to,” Goodman said. “It has to be under oath. If you found something contradictory in an affidavit that is sworn to under penalties of perjury, then that’s where you really have a claim of false official statement. Here, you have none of that. You have a one-page, pre-printed questionnaire that was simply signed. There was no witness to attest to it, it wasn’t done under penalty of perjury, (and) it wasn’t sworn to.
“The second issue, which is really the main issue, is that he was truthful in responding to that question. He didn’t take prescription medications in the last two weeks (prior to the fight).”
Payout Perspective:
Next month’s hearing will be very interesting to see how the commission will rule on Diaz’s claims. While the pre-fight questionnaire will loom as evidence that Diaz lied, Diaz’s counsel makes an interesting argument about the admissibility of the document. The questionnaire’s language does not constitute a legal declaration as the confirmation of truth language states: “I hereby attest that the above information is true and accurate to the best of my knowledge.” Its likely that these forms will be updated pending Diaz’s hearing.
Secondly, we will see whether the commission will entertain Diaz’s claim that his marijuana use is not a prescription.
From the Nevada Attorney General’s perspective, its interesting that it made a statement about Diaz’s response brief prior to the hearing. Furthermore, its pubic relations team should have thought out the correct words to use when describing on the questionnaire that he had not used prescription drugs 2 weeks prior to the fight. The public information officer stated: ”not only did Nick Diaz violate the law by testing positive for marijuana metabolites, but he also lied to the commission on his pre-fight questionnaire when he swore that he had not used any prescribed medications in (the) two weeks before the fight.” (h/t MMA Junkie). The use of the word “swore” connotes the use of a legal declaration like the one Diaz gave in his response brief. The PIO could have kept it simple and stated that “Diaz violated the law by testing positive and lied to the commission.” But, to go further allowed Diaz’s counsel to counterpunch with the legality of the document argument. Perhaps this is a subtle misstep, but it allowed an opening for Diaz legal team to gain a PR advantage.
UFC threatens lawsuit against Oklahoma
March 9, 2012
MMA Worldwide reported that Oklahoma is being threatened by litigation from the UFC for imposing a 4% tax on PPV in the state. As a result, the Oklahoma state athletic commission is not taking on any new applications for licenses from MMA promoters.
Via MMA Worldwide:
Unfortunately, after March 31st of this year, combat sport competitions will come to a grinding halt in the state of Oklahoma. The state is under a threat of a lawsuit by none other than the UFC. It seems the UFC wants the state to drop a 4% pay-per-view tax imposed by the state, but without it… they will no longer have the funds necessary to regulate any boxing or MMA events held in Oklahoma.
The article states that over 200 events happen each year across the state. If the state loses out on MMA, the events could remain in the state but on tribal grounds and casinos. It also provides a copy of the letter. Click on the image to read it.
Payout Perspective:
An interesting strong arm tactic by the UFC and it would be interesting to see on what grounds the UFC would sue the state. If you are in Oklahoma, the impact of viewing live MMA might not be harsh considering that the events could move to tribal casinos in the state where federal law trumps state. The state is in a bad position as it claims it needs the revenue from the PPV tax but wants to keep in the good graces of the UFC (and stay away from a potential lawsuit).
New York files its Reply Brief in Zuffa lawsuit
March 4, 2012
The New York District Attorney and Attorney General have filed its reply brief in support of its motion to dismiss two counts of Zuffa’s lawsuit against New York. MMA Payout takes a look at some of the arguments rebutting Zuffa’s opposition.
If you’ve been following the lawsuit, the New York was given the opportunity to file a limited motion to dismiss on the issues of Equal Protection and Due Process.
New York contends that Zuffa’s argument that courts have considered post-legislation changed circumstances fails because facts still exist which address the reasons for the law.
New York addresses Zuffa’s opposition brief in which, among its arguments, relied on the fact that courts have looked to changed circumstances when conducting a review of a law. New York makes the argument that post-legislation changed circumstances cannot destroy a law’s rational basis since such circumstances would not have affected the law’s rational basis in the first place. In fact, New York argues that courts have more freedom to consider post-legislation circumstances to uphold a law than to overturn it.
Another interesting argument used by New York to rebut Zuffa’s contention that MMA is safer now than when the MMA Ban was enacted is that Zuffa points out to safety regulations and precautions it has enacted and only vaguely refers to other MMA organizations. As such, New York contends that there is still “‘a reasonable conceivable state of facts’ that might warrant the prohibitions of the 1997 legislation.” Basically, New York argues that while the UFC may have enacted safety changes, it cannot support its argument with facts from other organizations.
New York actually turns Zuffa’s safety reforms on its head citing the fact that Zuffa admits its a combat sport with risk and that its mandatory waiting period for concussions and insurance reflect the fact that the sport includes risk. Thus, New York argues that the 1997 legislation banning MMA might be a rational response to these safety issues. As a result, New York contends that regardless of the changed circumstances that have occurred since the law was enacted in New York, the state had a rational reason to enact the law.
In response to Zuffa’s claims that either amateur MMA is not regulated and the fact that other perceived dangerous sports are not regulated, New York rebuts these concerns by pointing to the legislative branch as the authority to either regulate or amend a law if it flaws are found in the law.
Notably in footnote 3 of its reply brief it makes the argument (which one might add may beyond the scope of the motion) that the First Amendment does not apply to mixed martial arts citing Courts have been unwilling to extend free speech protection to sports or athletics.
(H/t: Fight Lawyer Blog for the Reply Brief)
MMA Payout will continue to follow the proceedings and report on the Court ruling when it occurs.
DISCLAIMER
The information in this post is opinion only. In addition, and because this is my opinion, it is not intended to be (and is not) legal advice or an advertisement for legal services. This post provides general information only. Although I encourage interested parties to contact me on the subjects discussed in the article, the reader should not consider information on this site to be an invitation for an attorney-client relationship. I disclaim all liability in respect to actions taken or not taken based on any contents of this post. Any e-mail sent to me will not create an attorney-client relationship, and you should not use this site to send me e-mail containing confidential or sensitive information.
Zuffa responds to New York’s motion to dismiss
February 17, 2012
Zuffa filed its response to New York’s motions to dismiss its Equal Protection and Due Process causes of action in its Complaint. It also argued that the Court should consider the changed circumstances in determining the MMA ban in New York state.
As you may recall, New York filed a motion to dismiss on two causes of action in Zuffa’s Complaint and indicated that it may file a further motion to dismiss the rest of the lawsuit.
Zuffa’s 39 page response is broken into two sections. The first section addresses the issue of whether a court may look into a changed circumstance when conducting rational basis scrutiny under the Equal Protection and Due Process Clauses. Zuffa provides the court with a plethora of cases which have courts looking into changed circumstances while asserting that there are no rulings to the contrary.
The second section of the response brief contends that there are issues of fact with both its Equal Protection and Due Process claims to survive the motion to dismiss.
(H/t: Fight Lawyer)
Payout Perspective:
As you may recall, the Court requested briefing on the following issue:
Defendants will submit a limited motion to dismiss addressing only the issue of whether due process and equal protection analysis requires the Court to determine whether there was a rational basis for the law at issue only at the time it was passed, or whether the Court must determine whether there is a rational basis for the law at present (in other words, whether the Court should take into account a change in factual circumstances that makes the law no longer rational, even if it had a rational basis at the time of passage). Defendants’ motion is due 1/27/12. Plaintiffs’ reply is due 2/17/12.Defendants’ response is due 3/2/12. (js) Modified on 1/9/2012 (tro). (Entered: 01/06/2012)
Essentially, will a court look at the changing circumstances that occurs over the course of time when considering if a law has a rational purpose.
Zuffa contends that the defendants should have briefed the court on the issue above instead of New York’s “full blown” motions to dismiss. Zuffa has an argument if you look at the “addressing only the issue” language in the first sentence of the court order. However, its likely that the court will rule on New York’s motions.
Zuffa, as most parties do in a brief, argue the differences in the opposition’s cited cases in its brief. Here, it argues that the cases cited by New York do not address the specific issue at hand: whether courts take into consideration changed circumstances when conducting a rational basis analysis under the Equal Protection and Due Process Clause.
In the second part of the response briefing, Zuffa identifies facts that should have its causes of action survive a motion to dismiss. Much of this has been detailed in the Complaint.
New York’s Reply Brief is due March 2nd. We will keep you posted and have more in the coming days.
Former gym obtains bond, order to garnish Overeem’s wages
February 11, 2012
MMA Junkie reports that attorneys for Knockout Investments (KOI), owners of Golden Glory (GG), have secured a bond to garnish the wages of UFC heavyweight Alistair Overeem from UFC 141. The attorneys for KOI and GG obtained a second writ of attachment late last month.
An order for a second writ of attachment to garnish Overeem was entered January 27th and the entry of the order and posting of the bond took place on January 31st.
Via MMA Junkie:
This order asks $427,714.27 to be withheld by UFC parent company Zuffa LLC and deposited by check to a Nevada District Court. The amount is nearly double that of a previous order obtained the day of UFC 141, which was not executed when a surety bond was not deposited to the court.
According to the Junkie article, this court order requests garnishment of guaranteed payments from UFC 141 includes 30% of Overeem’s purse, PPV, ancillary and intellectual property payments which are to be paid to Overeem are due within 30 days of 141. Thus, they came due on January 30th.
Payout Perspective:
We explained last time the procedural reasons why KOI and GG could not garnish Overeem’s wages from 141. It was reported that due to the lack of bond, the Nevada State Athletic Commission paid Overeem his fight purse. We might assume from the order, that Zuffa has yet to pay Overeem in full for the other areas he is owed including the first payment of his $1 million signing bonus. If Overeem’s fight purse has been paid to Overeem, there will be another fight to get that money.
Initially, it appeared that the first attempt to garnish wages was a mere tactic in the litigation between the two camps. Now, it appears that KOI and GG mean business with the security bond. Expect further litigation maneuvers especially with Overeem set for one of the biggest fights (and bigger paydays) of the year against Junior dos Santos.
UPDATED: Fighters seek sanctions from producers of MMA reality show
February 10, 2012
IP 360, a legal daily focusing on issues in intellectual property reports on the recent motion for sanctions in a trade secret lawsuit filed in Illinois involving an MMA reality show focusing on women. The producers claims that several fighters on Ultimate Women’s Challenge revealed results of the yet-to-be aired show.
UPDATE: 02/10/12 – Just to clarify, this lawsuit was filed last year and was covered by other web sites, including MMA HQ, which was one of the named web sites in the complaint that released results from the show. MMA Weekly also had a post on this last spring and was another web site named in the lawsuit. Sherdog was the third web site named as one that released info on the show prior to its airing. SEM claims that either the fighters involved in this lawsuit or their attorneys leaked the info of the results. These web sites were NOT parties to the lawsuit, just identified in the complaint.
The updated info last week relates to defendants’ motion seeking sanctions against SEM in claiming that the lawsuit lacks jurisdiction and the trade secret claim is baseless. So, the takeaway here is the fighters’ attorneys argument that SEM’s trade secret cause of action is without merit. According to defense counsel, in order to make a claim under Illinois Trade Secret law, there must be a showing of 1) an alleged trade secret; 2) misappropriated and 3) used by the defendants in its business. Defendants claim that SEM cannot make a claim under Illinois law considering that the fighters’ business is MMA and do not own or produce reality television.
Here’s the background:
Essentially, Sean Morrison Entertainment, LLC (SEM) is suing a Wisconsin law firm and several of the women fighters that were contestants on the show for allegedly revealing results. The fighters claim that they were not paid for their participation on the show. In filing a claim for nonpayment, they revealed results of the show.
Ultimate Women’s Challenge finished production in September 2010 but has yet to air. Originally, it was scheduled for NBC although there are no signs it will be on NBC or its new sports network.
The fighters claim that the trade secret lawsuit filed by SEM has no merit since the fighters are not a business seeking to compete with SEM. Also, the fighters and law firm are requesting sanctions for what they perceive as a harassment lawsuit which only is meant to drive up litigation costs.
SEM claims that the wage lawsuit filed by the fighters should have been filed under seal so the public would not be able to access the facts of the lawsuit. Also, SEM claims, regardless of the lawsuit, attorneys and fighters leaked results of the show.
In its motion seeking sanctions, the fighters also argued that jurisdiction (the court which the lawsuit should be filed) in Illinois was not appropriate. And to reaffirm the fact that lawyers can be prickly, here’s a portion of the fighters’ response to the jurisdiction issue in SEM’s lawsuit:
Either plaintiffs’ counsel lacks the knowledge of a first-year law student or, more likely, its Illinois attorney chose to ignore the law and decided to file in Illinois anyway, because as an Illinois-based LLC, this jurisdiction would be most convenient for plaintiff and its attorney, (h/t IP 360)
A copy of the lawsuit and the participation agreement signed by the fighters are here at the Brooklyn Law School Trade Secret Institute page.
Payout Perspective:
UPDATE: The IP 360 article relates to the latest filings in this case in which the attorneys for the fighters have filed a motion for sanctions re SEM’s lawsuit. Notably, defense counsel oppose the jurisdiction as the lawsuit was filed in Illinois and the trade secret claim. The latest motion includes strong contentious language as Rule 11 sanctions are pretty serious. Expect a similar filing back from SEM’s counsel. When attorneys call out attorneys like this, it never is pretty.
It’s been awhile since we last reported on this show, July 2010 to be exact. It’s obviously been shelved indefinitely and will unlikely see television for a variety of reasons, the lawsuit being one of them. From SEM’s perspective, revealing results is the worst thing that could happen to a reality show premised on a tournament where the outcome is uncertain. From the fighters’ perspective, if they were not paid, and SEM denied payment, it seems like a claim for wages was the only other way to seek payment. The participation agreement (at paragraph 5) indicates that the fighters will be paid $1,000 plus $100 for each day on the show. Based on this, one can deduce from a fighter’s complaint for wage how long an individual lasted on the show. The participation agreement is an interesting read in the rights of the contestants and is a glimpse into the world of reality television contracts.
MMA Payout will keep track of this litigation as it progresses.
US Government shuts down illegal sites
February 2, 2012
A Reuters report states that the US Government shut down 16 web sites related to the illegal streaming of live sports. The sites provided links to pirated sites where viewers could watch sports including NBA, NFL, WWE and TNA pro wrestling for free.
The sweep of illegal sites is in preparation for Super Bowl Sunday. Who watches the Super Bowl via illegal streaming? The article reports that Tom Brady actually used an illegal web site last year in Costa Rica to watch the Packers-Steelers Super Bowl.
The feds arrested a Michigan man who was charged with one count of criminal copyright infringement. Its alleged that he ran several of the pirate sites receiving $13,000 from online merchants who advertised with him. The man was caught as a federal agent posed as a WWE representative seeking to buy a domain from the man.
Payout Perspective:
The crackdown on illegal sites should appease the WWE and the UFC in its constant effort to curb piracy. The article provides some interesting insight on the business behind illegal streaming. The ad revenue seems small considering the risk one may take for running such a site.
FTC Ends UFC Investigation Regarding Strikeforce Purchase
February 1, 2012
Earlier today, Josh Gross from ESPN.com broke the news that the Federal Trade Commission has closed a non-public investigation into the UFC’s purchase of Strikeforce as of last week.
ESPN reports:
Documents published on the FTC website dated January 25, confirm the FTC’s Bureau of Competition conducted an investigation to determine whether the $34 million acquisition of Explosion Entertainment, LLC, by UFC’s parent company, Zuffa LLC, violated Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
…
In closing letters issued to counsel for Zuffa and Explosion Entertainment, FTC secretary Donald S. Clark stated, “Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed.”
The full letter from the FTC is below (H/T: FightOpinion.com):
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary
January 25, 2012
Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036
Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136
Dear Mr. Axinn:
The Federal Trade Commission’s Bureau of Competition has been conducting a nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.
Upon further review of this matter, it now appears that no further action is warranted by the Commission at this time. Accordingly, the investigation has been closed. This action is not to be construed as a determination that a violation may not have occurred, just as the pendency of an investigation should not be construed as a determination that a violation has occurred. The Commission reserves the right to take such further action as the public interest may require.
By direction of the Commission.
Donald S. Clark
Secretary
New York files Motion to Dismiss portions of Zuffa’s lawsuit
January 30, 2012
The New York District Attorney and Attorney General filed separate motions to dismiss two claims in Zuffa’s lawsuit in New York City. While the lawsuits seek to dismiss only a portion of the UFC complaint, it appears that the defendants are leaving open a motion to dismiss the entire complaint in total at a later date.
Courtesy of the Fight Lawyer, the two motions are below:
Attorney General’s Motion to Dismiss
District Attorney’s Motion to Dismiss
Payout Perspective:
The crux of both arguments appear to be that despite Zuffa’s claims, the fact remains that New York had a rational basis for enacting the ban at the time it was drafted. And based on this, the statute was not vague and overbroad as it relates to the due process and equal protection claims. They cite to case law which supports the theory that despite changes over the years that may, arguably, antiquate a statute’s purpose, under a rational basis review of a law, so long as there was a rational purpose for it at the time of its introduction it is valid.
Both motions argue that the proper forum for Zuffa’s claims is with the legislature and that if Zuffa wanted to enact change, it should direct its efforts to the legislature.
Via the District Attorney’s motion to dismiss:
…as a proper exercise of judicial restraint, federal courts must uphold a statute that was rational when enacted, even when post-enactment developments cast doubt on the wisdom, logic, or providence of prior legislative decisions
It also argues that legislatures are given “substantial latitude” when it comes to enacting laws under a rational basis review of the law as “imperfections and even inequality must be tolerated.”
The defendants’ motions are persuasive and could set the dominoes in line if the court grants the motion to dismiss Zuffa’s claims. As indicated in its motions, both parties contemplate a further motion to dismiss the rest of Zuffa’s claims if it is successful with this motion.
